US rate hike weakens Australian Dollar

The interest rate hike over in America coupled with the prediction of four more next year has led to the GBP/AUD exchange rate racing through the 1.70 level and looking like it may be back on the up.

Should we see the four expected hikes for the States then we would have a situation where the U.S interest rate is sat level with the current Australian interest rate of 1.5%. Due to the USD being a little more stable and a much more sensible choice for investors we are seeing a sell off of the Australian Dollar at present in favour of the US Dollar which is why we are witnessing a bout of Australian Dollar weakness at present.

I would not be overly surprised to see the GBP/AUD exchange rate creep up closer to 1.75 over the course of this week die to this current trend but do be wary that we have the RBA minutes from their last interest rate decision to tackle overnight tonight.

RBA minutes tonight

Overnight tonight we have the RBA minutes from their last interest rate decision which can lead to quite sharp movements depending on what is mentioned in them.

Any hint towards an interest rate change or an alteration to future fiscal policy may lead to a spike in the market so it may be prudent to look to have a market order in to cover such an event happening. A market order is where you can set a particular rate of exchange that you would like to achieve and should it become available, even for a matter of seconds then your currency gets bought out automatically for you.

There are a few signs showing that the Australian economy is not performing too well at present so it is a doubt that the minutes will be overly positive so I would expect to see Australian Dollar weakness overnight.

Feel free to contact our trading floor on 01494 725353 or email me here should you wish to discuss an upcoming Australian Dollar exchange.


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